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Scottish mega-trust move

Investment trust Advance UK has written to Scotland&#39s biggest investment trusts proposing a mega-merger to form a £7bn-plus Scottish super-trust.

Progressive Asset Management, which manages Advance, says a merger would deliver numerous benefits, including a high-profile position in the FTSE 100. It says this profile, along with increased liquidity and access to the best managers, would ensure the fund traded at a premium or at least at net asset value.

The letter follows the rejection of the £560m Second Alliance investment trust from the FTSE All Share index last week due to lack of trading in its shares. Advance first wrote to Alliance suggesting a merger of its Alliance and Second Alliance trusts, indicating that the combined market cap of £2.2bn would leave it just outside the FTSE 100.

Advance has now gone a step further, proposing a merger of all Scottish generalist trusts, including the £1.5bn Scottish mortgage trust and £1.2bn Scottish investment trust.

Progressive investment director James Carthew says: “We believe a series of friendly mergers of Scottish generalists could create a champion. I have written to the chairmen of the trusts explaining the idea and asking them to discuss it with their directors. We will wait and see what the response is.”

Alliance Trust chief executive Gavin Suggett says: “My initial reaction to a super-trust was if it is such a good idea, then why hasn&#39t it been done before? But it is worth talking about.”

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